On October 21, a significant event took place in the world of Nasdaq traders. A new ticker, NBIS, emerged, a truncation of Nebius. This fledgling player in the AI cloud infrastructure space had been quietly building its presence. Many casual observers might have wondered where this company came from, as there was little of the usual fanfare surrounding startups' IPO journeys. But Nebius is an unusual beast, a public company with the essence of a startup.

Yandex's Journey and the Birth of Nebius

Nebius actually became public 13 years ago in May 2011 as Yandex N.V., the Dutch holding company of the Russian internet giant Yandex, often dubbed the "Google of Russia." At the end of 2021, it reached a peak valuation of $31 billion. However, with Russia's invasion of Ukraine in early 2022, everything changed. Nasdaq halted trading in Yandex N.V. shares due to sanctions, and a year later, it announced the delisting. But Yandex successfully appealed, undergoing a restructuring process that took an additional 16 months to complete. This divestment led to the creation of Nebius AI, an AI cloud platform with its own Finnish data center.The new business was spearheaded by Arkady Volozh, the Russian Yandex co-founder and former CEO. He was removed from a European sanctions list in March after publicly condemning Russia's assault on Ukraine.

The Core Nebius Business

The core Nebius business sells GPUs "as-a-service" to companies in need of "compute" - processing power and resources for tasks like running algorithms and executing machine learning models. Last month, the company debuted a holistic cloud computing platform for the "full machine learning lifecycle," spanning data processing, training, fine-tuning, and inference.With the restructuring complete and Volozh free to run the show from the new headquarters in the Netherlands, Nasdaq green-lit Nebius to recommence trading last month. This situation was unprecedented - a public company with trading paused and now resuming under a new name and different business proposition.In the first month of trading, Nebius had a somewhat tepid re-entry. It was significantly down on its $18 billion market cap before trading halted in February 2022, but it has since yo-yoed between $3.5 billion and $4.75 billion, showing signs of settling.Volozh explained to TechCrunch that building infrastructure is capital intensive, and the public markets are the easiest and cheapest way to access capital in the current hot tech space. But there was uncertainty about how the public markets would respond to this new entity.

Nebius' Competitors and Expansion Plans

Nebius competes with the usual hyperscaler cloud behemoths. Its more direct rivals are other alternative cloud startups like CoreWeave, which has raised a lot of cash this year. While CoreWeave is expanding from the U.S. to Europe, Nebius is moving in the opposite direction, announcing plans to extend its presence to the U.S. with a new GPU cluster in Kansas City (on the Missouri side) scheduled to go live in early 2025. The company has also opened "customer hubs" in San Francisco and Dallas and plans a third in New York by the end of the year.

The Nebius Group's Additional Businesses

Under the Nebius Group umbrella, there is a triumvirate of additional businesses. Avride is an autonomous vehicle company based in Texas, descending from Yandex's self-driving unit. It was an early trailblazer in Russia but had its plans disrupted by the war. The team working on Yandex's autonomous vehicle project transitioned to Avride last year and is now based in Austin via Tel Aviv.Last month, Avride announced a significant multiyear partnership with Uber, with its sidewalk food delivery robots landing on Uber Eats in Austin and its self-driving cars set to join the Uber platform later.Toloka is a platform specializing in data labeling and quality control for large language models and related AI systems. It has clear synergies with Nebius's core infrastructure business but serves different customers. Nebius works with generative AI startups seeking compute, while Toloka works with bigger companies like Amazon and Hugging Face.TripleTen, on the other hand, is a direct-to-consumer product offering online coding bootcamps for those looking to transition into the technology sector. It is somewhat of an outlier in the Nebius group and is currently breaking even. Volozh acknowledges it won't be a big revenue driver like the infrastructure business but has potential to provide meaningful income and will remain part of the group.

The Core Nebius AI Cloud Business

For the core Nebius AI cloud business, the company already has its fully owned data center facility in Finland and plans to triple its capacity to 75 megawatts. It is also building out additional sites at co-location facilities to increase capacity and reduce latency by bringing processing closer to customers. In addition to the Kansas location announced this week, Nebius has already unveiled a new GPU cluster in Paris that goes live this month.Further down the line, Nebius plans to build more of its own data centers in both Europe and the U.S. Given the time it takes to build, using co-location facilities is a quicker way to bridge the gap, which is why it is adopting a hybrid approach.Volozh emphasized that building data centers takes a long time, about a year and a half to two years, and they can't wait. That's why they have these co-locations in Paris and Kansas City.